MEASUREMENT OF LOGISTICS-QUALITY
Enikő LEGEZA
Deparment of Transport Economics
Budapest University of Technology and Economics
H1111 Budapest, Bertalan Lajos Street 2, Building Z, Room 410
Hungary
Email: elegeza@kgazd.bme.hu
Abstract
Because of the sophisticated characteristics of logistics it is difficult to survey the
needs of customers and to create a comprehensive quality requirements system. On the joint
points of logistics chain we always find a seller-buyer relation. The buyer has his quality
requirements to be satified by the seller.
Quality measuring indicators will be suggested in the following three areas:
- logistics facilities,
- logistics process, subprocesses,
- human factors, management, organisation.
They will be analyzed by a logistics performance and logistics costs matrix.
Keywords: logistics, quality measurement
Quality as a requirement has great importance also in the service
industry. If a service activity is not very sophisticated, the quality terms and
requirements applied in industry can be adopted here. We can see that more
and more transport companies let them be qualified by respective Quality
Standards.
Logistics is a complex process, it is divided into activities. The
activities themselves carried out at high quality will not automatically turn a
process into a high standard one but they offer chance.
The logistics system has the following areas with quality concerns:
- logistics facilities,
- logistics process and its subprocesses,
- human factors of service, organisation, management.
Quality will be assessed by the consumers. It is not possible to find
just one consumer in the logistics process to satisfy his requirements (but the
final consumer is the real target), on the joint points of logistics chain there is
always a seller-buyer relation. A buyer always has his quality requirements,
the seller has to satisfy them. The final consumer should define these
requirements but it is not easy to focus on his demands at the beginning of
the logistics chain (e.g. mining raw material etc.). This way we will get
suboptimums at joint points, a comprehensive optimization of the whole
logistics process can be attained by a learning process.
The interests of the whole economy and the interests of a company are
not always the same (e.g. transport on week-end, transport by rail instead of
busy road etc.). For the economy not just the level of performance is
important but the selection of transport mode (environment protection).
A service activity is to be organized again and again every time. Its
performance and its quality can be different any time, it shows a distribution.
It is impossible to check its quality by instruments or automatically. Even the
customers assessment can vary.
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For this reason, the demand is stronger and stronger to garantee the
same quality level by standardized processes in compliance with the
respective Quality Standards.
If we speak about the quality of logistics beyond the three areas
(above), we have to involve the performance and productivity indicators and
the expenses.
1.Quality of logistics facilities
The facilities include:
a) - delivery facilities
- warehousing facilities
- packaging facilities
- material handling facilities
b) transport ways
ad a) Quality indicators of logistics facilities:
- load capacity , performance
- modern design
- suitability to jobs
- maintenance background
- man-facilities relation (ergonomy, environment protection)
- good-facilities relation (specialities of goods, unit load, packaging,etc.)
- ways-vehicles relation
- performance-price relation
- relation of expected life and price of facilities
- specific energy and lubricant costs
- specific performance costs
- specific maintenance costs
- reliability
- failurelessness (failure rate, MTBF, F(t), R(t) )
- longevity (general overhaul cycle, life span)
- restorability (av. restoring time, total break-down time)
- storability, transportability
ad b) Quality indicators of transport ways (rail, road, water, air)
- length, capacity, network , wayleading (curves, slope etc.)
- easy to survey, illumination, surface, speed, sensibility to weather,
comfort
- signs, information
- safety, help (telephone, helicopter etc.)
2.Quality indicators of logistics process(es)
Requirements:
- optimum combination of jobs (tasks) and facilities
- optimum packaging and load unit
- optimum logistics chain
- optimum route and time
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- minimum transfer of goods
- minimum warehousing event and time
- organizing and managing logistics activities in environment-friendly way
(minimum noise, outside of housing estates, by-passes, etc.)
Indicators :
- capacity supply/capacity demand
- appear time/ordered time
- damage events/total activities (packaging also)
- missing volume/total volume (packaging also)
- error delivery/total delivery commitments
- physical performance/time, processing time
- performed commitments/demanded commitments
- number of customers/year
3.Quality of service
The structure of organization and the human behaviour (way of
thinking, decision etc.) are very important factors. A customer needs beyond
physical performance also soft elements, such as how to reach the service
company by telecommunication, how to get the phone number or address,
after howmany minutes will they pick up the receiver, is the proper person on
the line to give information (price, time) and to make decision. How much time
does a commitment need altogether. It is important to give advice the
customer even if the company is not able to take the job.
Quality indicators :
- politeness
- quick information
- exactness
- reliability
- advising
- quick and optimum decision, flexibility
- quick response on complaints
- flexible tariffs
- price elasticity. rabatt
- computer, computer network
- telematics
- trucking & tracing
4.Logistics performance at companies
The productivity indexes of logistics are quantitative measures.
Their amounts just partly garantee the high quality but e.g. the transport
speed is an important factor of transport quality.
For this reason, its performance matrix is worth beeing looked at.
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Storing
Packaging
Material handling
Vol. loaded in/out
staff
Packaged pcs
staff
Handled volume.
staff
Transport
(in and out)
Fac.work time
fac.time capacity
Vol. loaded in/out
fac.and year
Tonkm
vehicle and year
Temporary
utilization
of facilities (%)
Packaged pcs.
facilities and year
Transported vol.
vehicle and year
Handled vol
fac.and year
Run km
vehicle and year
Names
Managing
(Dispatching)
1.Personnel
Commitment
staff
2.Company
facilities
Tr.ed volume
staff
Av.tr.distance
(km)
Utilization
of vehicles(%)
related to time,
load capacity and
tkm
3.Space
and surface
4.Keeping
inventory
Utilization of loading
surface (%)
Utilization of loading
space (%)
Av. Inventory
(volume, value)
Av. storage time
(day, hour, minute)
Av. inventory
efficiency (day,
minute)
Rotation
frequency/year
Commitments/year
Av. time of comm.
(hour, minute)
5
Average and total Number
Handled.vol
of comm. /year
staff
Numbers of
Handled vol.
suppliers/year
year
No of buyers/year
Packaged pcs
Op.time/comm.
staff
Return/year
Packaged pcs
year
Transported vol.
year
No of transports
year
Av.vol.
transport
Av.time
transport
5. Costs of logistics
Along the logistics chain there are seller-buyer relations in every joint
point. The seller adds some profit to his costs and offers his service at a price
to the buyer. For the buyer the previous price means costs again, he adds
more value and this way some profit to the previous service and sells it. This
relation is repeated in the whole logistics process till the final buyer
(customer).
It is not easy to separate logistics costs from he whole production
costs for a product which has many phases.
For this reason we should take a simple industrial company which gets
the raw material immediately from the extractive industry, manufactures just
one kind of products. This product will be sold to the customers (not to
another industry). Insurance is always included.
This scheme is repeated on the whole logistics chain.
Logistics costs at companies according to logistics activities
Kind of costs
Managing
(Dispatching)
1.Personnel
costs
Pers.costs
commitment
2.Company
facilities costs
3.Space
and surface costs
4.Inventory costs
Constr.and op.costs
year
Storage
Transport
Packaging
Material handling
Pers.costs
Pers.costs
volume, unit,value comm., volume, tkm,
Fac.costs
op.time or op.No
Vehicle costs
tkm,km
Fac.costs
hour
Vehicle costs
hour
Contr.and op. costs
year
Constr.and op.costs
year
Interest
volume, unit, value
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Stor., pack., handl., tariff
volume, unit, value
5.External service
Tr.tariff
tkm
Contracted logistics costs matrix (according to the kinds of costs)
Names
Managing
(Dispatching)
Costs according
to cost places
Managing costs
commitment
Transport
Storeaging
(own & external)
Packaging
Mat.handling
(own &foreign)
Stor.,pack,handl.costs Tr.costs
volume,unit, value commitment
Tr.costs
volume, tkm, km
Tr.costs
time& vehicle
Share of total
logistics costs
Share of cost
groups in total
logistics costs
Costs of total
logistics
performances
Total man.costs
total log.costs
Total tr.costs
Total stor& inv.costs
Total log.costs
total log.costs
Personnel costs/total log. costs
Company log. fac. costs/total log. costs
Space and surface costs/total log. costs
Inventory costs/total log. costs
Foreign log. costs/total log. costs
Total log. costs/year
Total log. costs/product
Total log. costs/total production costs
We have to remember the quality costs of logistics.
There are here three groups of quality costs:
- failure costs (wastes),
- control and assessment costs,
- prevention costs.
High quality performance does not necessarily mean higher costs. The costs
of wastes can be rearranged, reduced or eliminated by quality control and
prevention.
How to save logistics expenditures at macroeconomic level:
- reducing the number of logistics activities
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- optimum selection of logistics technologies, facilities (packaging, load unit,
multimodal transport, preferring rail- and waterways etc.)
- restructuring industry allocation
- modern, comprehensive organisation (logistics centres, just in time etc.)
With the specialisation and globalization of production and with ensuring a
wide range of choice of consumer's goods, the role of logistics is getting more
and more emphasized. The rationalisation of logistics process is essential.
6.Conclusion
Logistics costs take 18-23% of total production costs (in a wider sense even
40%).
For this reason production companies are going to make these
activities more effective. Big companies have third partners (forwarders)
make it. A forwarder can comprehend and optimize a longer interval of
logistics chain.
The share of distribution and production logistics is not right. The
border is not sharp. In the case of quality the question is how and not where.
The seller and buyer relation can be found in all joint points of the logistics
chain.
References
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